Employer Questions and Answers about the Mental Health Parity
Act
Questions:
- Is
there a separate effective date for collectively bargained
plans?
- If
a State has its own parity law that is more liberal than MHPA
(i.e., requires more favorable treatment of mental health
benefits), which law takes precedence? What effect do State
mandated benefits laws have if they do not require parity but do
mandate mental health benefits?
- Does
MHPA require all group health plans to provide mental health
benefits?
- May
group health plans impose other restrictions on mental health
benefits and still be in compliance with the MHPA?
- Do
all group health plans offering mental health benefits have to
meet the parity requirements?
- How
does a group health plan qualify for an exemption under the one
percent cost provision?
- For
how long is the exemption granted?
- What
kind of costs can be used in making this one percent increased
cost determination?
- If
a group health plan claims an exemption, what ensures that the
cost information is accurate?
- Who
enforces the law?
- Must
self-funded nonfederal governmental plans comply with MHPA?
- Will
the names of group health plans claiming the one percent exemption
be published? Can the public obtain the supporting cost data of
those plans that claim the exemption?
- Do
all group health insurance policies have to include parity?
- How
can I learn more about the MHPA?
Answers:1) Is there a separate effective
date for collectively bargained plans?
No. MHPA is effective
for plan years beginning on or after January 1, 1998, regardless of
when the plan is collectively bargained.
2) If a State has its own parity
law that is more liberal than MHPA (i.e., requires more favorable
treatment of mental health benefits), which law takes precedence?
What effect do State mandated benefits laws have if they do not
require parity but do mandate mental health benefits?
A State law that
requires more favorable treatment of mental health benefits under
health insurance coverage offered by issuers (generally, health
insurance companies) would not be preempted by the provisions of
MHPA and the interim rules. Generally, group health plans must
comply with the Federal parity requirements, but issuers are subject
to State law. The combined effect of Federal and State rules will
vary from State to State. You should contact your State insurance
commissioner's office for information about parity and State laws
mandating that mental health benefits be included in the plan.
3) Does MHPA require all group health
plans to provide mental health benefits?
No. Group health plans
are not required to include mental health coverage in their benefits
packages. The requirements under MHPA apply only to group health
plans offering mental health benefits. Also, parity does not apply
to any policies sold in the individual market.
4) May group health plans impose
other restrictions on mental health benefits and still be in
compliance with the MHPA?
Yes. The law does not
affect the terms and conditions (such as cost sharing, limits on
numbers of visits or days of coverage, and requirements relating to
medical necessity) relating to the amount, duration, or scope of
mental health benefits.
5) Do all group health plans
offering mental health benefits have to meet the parity
requirements?
No. There are two
exemptions from the parity requirements. The mental health parity
requirements do not apply to small employers who have between 2 and
50 employees or to any group health plan whose costs increase one
percent or more due to the application of the parity requirements.
6) How does a group health plan
qualify for an exemption under the one percent cost provision?
Generally, plans must
implement parity for the first plan year beginning on or after
January 1, 1998, but may claim an exemption from parity if, based on
at least six months actual data, a plan has experienced a one
percent or more cost increase. Increased costs do not include
premium payments.
The exemption is not
effective until 30 days after the plan notifies participants and
beneficiaries of the plan's decision to claim the one percent
increased cost exemption. Plans also must send a copy of the notice
to the government.
A group health plan
that is a church plan must furnish the notice to the Department of
the Treasury. A group health plan subject to Part 7 of Subtitle B of
Title I of ERISA must furnish the notice to the Department of Labor.
A group health plan that is a nonfederal governmental plan must
furnish the notice to the Department of Health and Human
Services.
In addition, to claim
the one percent increased cost exemption, a plan (or issuer) must
make available to participants and beneficiaries (or their
representatives), on request and at no charge, a summary of the
information required to support the exemption.
7) For how long is the exemption
granted?
The group health plan
exemption continues in effect (at the plan's discretion) until
September 30, 2001, even if the plan subsequently purchases a
different policy from the same or a different issuer and regardless
of any other changes to the plan's benefit structure.
8) What kind of costs can be used
in making this one percent increased cost determination?
The costs may include
claims incurred during the six months period that would have been
denied under the terms of the plan absent the parity requirements as
well as administrative expenses attributable to complying with these
requirements.
9) If a group health plan claims
an exemption, what ensures that the cost information is
accurate?
Because the exemption
is based on actual claims data and administrative expenses, the
summary information plans are required to make available will be
based on data at hand and not based on projections of costs. Plan
participants and beneficiaries have a private right to seek civil
action against the plan. Any evidence that the cost information is
not accurate may be referred to the Federal agency that has
jurisdiction.
10) Who enforces the law?
The provisions of MHPA
are set forth in Chapter 100 of Subtitle K of the Internal Revenue
Code, (the Code), Part 7 of Subtitle B of Title I or ERISA, and
Title XXVII of the Public Health Service Act (PHS Act). The
Secretaries of the Treasury, Labor, and Health and Human Services
share jurisdiction over the MHPA provisions. These provisions are
substantially similar, except as follows:
The MHPA provisions in
the Code generally apply to all group health plans other than
governmental plans, but they do not apply to health insurance
issuers. A taxpayer that fails to comply with these provisions may
be subject to an excise tax under section 4980D of the Code.
The MHPA provisions in
ERISA generally apply to all group health plans other than
governmental plans, church plans, and certain other plans. These
provisions also apply to health insurance issuers that offer health
insurance coverage in connection with such group health plans.
Generally, the Secretary of Labor enforces the MHPA provisions in
ERISA, except that no enforcement action may be taken by the
Secretary against issuers. However, individuals may generally pursue
actions against issuers under ERISA and, in some circumstances,
under State law.
The MHPA provisions in
the PHS Act generally apply to health insurance issuers that offer
health insurance coverage in connection with group health plans and
to certain State and local governmental plans. States, in the first
instance, enforce the PHS Act with respect to issuers. Only if a
State does not substantially enforce any provisions that apply to
issuers under its insurance laws will the Department of Health Human
Services enforce the provisions, through the imposition of civil
money penalties. Moreover, no enforcement action may be taken by the
Secretary of Health and Human Services against any group health plan
except certain State and local governmental plans.
11) Must self-funded nonfederal
governmental plans comply with MHPA?
Self-funded nonfederal
governmental plans may choose to be exempted from the parity
provisions if the election complies with the requirements of the
Federal regulations at 45 CFR 146.180. Please see section on nonfederal
governmental plans for more detail.
12) Will the names of group
health plans claiming the one percent exemption be published? Can
the public obtain the supporting cost data of those plans that claim
the exemption?
Nonfederal
governmental plans claiming the one percent exemption will be listed
on HCFA's website. Plans must make available to participants and
beneficiaries (or their representatives), on request and at no
charge, a summary of the information required to support the
exemption. An individual who is not a participant or beneficiary and
who presents a notice is considered to be a representative.
13) Do all group health
insurance policies have to include parity?
No, but a health
insurance issuer can only sell a non-parity policy to a plan that is
exempt from the parity provisions of the law. Also, MHPA does not
apply to any policies sold in the individual market.
14) How can I learn more about
the MHPA?
View
a full copy of the December 22, 1997 interim rule in the Federal
Register.
View only
the Department of Health and Human Services's mental health parity
regulations.
Contact PHIG by E-mail at PHIG@hcfa.gov
Or by U.S. Mail at: The Health Care Financing Administration,
CMSO/PEIS C4-25-02, 7500 Security Boulevard, Baltimore, MD
21244-1850; Attention: Mental Health Parity.
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